Bailout for Crossrail As Further Delay Announced

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New leadership for project as Mayor says previous management was 'far too optimistic'

The already delayed Crossrail project is set to fall further behind schedule and has had to receive more emergency funding to allow the project to be completed. Transport for London (TfL) say that it has become clear that more work is required than had been envisaged to complete the infrastructure and then commence the extensive testing necessary to ensure the railway opens safely and reliably.

Originally planned to open this month as the Elizabeth Line, the revised completion date of autumn 2019 is now being pushed back with no firm indication being given of when the service will be running.

An extra £1.4billion is being given in what is the third tranche of extra funding for the project after a review by accountancy firm KPMG revealed a total shortfall of between £1.6bn and £2bn of funds needed to complete the project.

The delays mean further financial pressure for Transport for London which says that its revenues will fall by at least £20million due to the delay.

Elizabeth Line trains are already operating between Paddington and Hayes & Harlington as well as on the eastern section of the line but look unlikely now to be connected up to the central section next year.

Core elements of the infrastructure being delivered by Crossrail Ltd, including the stations and the fit out of the tunnels, are at varying stages of completion and the extra funding required to finish this work, as well as the extensive safety and reliability testing needed for the new railway systems.

The emerging findings of the KPMG review into Crossrail Ltd’s finances indicate the likely capital cost impact of the delay to the project announced in August could be in the region of between £1.6billion and £2billion. That includes the £300million already contributed by the Department for Transport (DfT) and TfL in July 2018, leaving an estimated £1.3billion to £1.7billion to complete the project.

The Mayor of London and the Government have agreed a financial package to cover this. The Greater London Authority (GLA) will borrow up to £1.3billion from the DfT. The GLA will repay this loan from the existing Business Rate Supplement (BRS) and Mayoral Community Infrastructure Levy (MCIL). The GLA will also provide a £100m cash contribution, taking its total contribution to £1.4bn which it will provide as a grant to TfL for the Crossrail project. Because the final costs of the Crossrail project are yet to be confirmed, a contingency arrangement has also been agreed between TfL and the Government. This will be in the form of a loan facility from the DfT of up to £750million, should the higher end of the estimate be realised. This combined financing deal will replace the need for the £350million interim financing package offered by the Government in October.

The Mayor and the Secretary of State for Transport also confirmed they have nominated Tony Meggs as the new Chair of Crossrail Ltd, and if ratified by the Crossrail Ltd Board he will replace Sir Terry Morgan who resigned on 5 December.

Tony Meggs, who will step down from his role as CEO of the Infrastructure and Projects Authority (IPA), will oversee the final stages of delivering the Crossrail project.

Mr Meggs said: "It is a privilege to join the Crossrail team. My number one priority will be to work with the Board and Executive team to ensure this project is completed as soon and as safely as possible.

“The UK is renowned for its outstanding engineering and expertise in major projects and I’m confident that we will deliver a world class project that will benefit the country for generations to come.”

Former MP Nick Raynsford as Deputy Chair has also been nominated to the Crossrail board. He served as Minister for London on two occasions between 1997 and 2003.

Mayor of London, Sadiq Khan, said, “I haven’t hidden my anger and frustration about the Crossrail project being delayed. This has a knock-on consequence of significant additional cost to the project. It has been increasingly clear that the previous Crossrail Ltd leadership painted a far too optimistic picture of the project’s status.”

He has ordered the release of all Crossrail Board minutes from the last five years to provide transparency on the decision making process and written to the National Audit Office (NAO) confirming his full support of its planned investigation into the Crossrail project. The independent KPMG reports into Crossrail Ltd’s finances and governance will be made available to the NAO to help it with its conclusions and they will be published once finalised.

Mark Wild, Chief Executive, Crossrail Ltd, said, “Since I joined Crossrail Ltd in November I have been reviewing the work still required to complete the core stations and rail infrastructure and begin the critical safety testing. It is evident that there is a huge amount still to do. Stations are in varying stages of completion and we need time to test the complex railway systems. This means that I cannot at this stage commit to an autumn 2019 opening date. My team and I are working to establish a robust and deliverable schedule in order to give Londoners a credible plan to open the railway and provide a safe and reliable service. Once that work is completed we will then be in a position to confirm a new opening date.”

December 10, 2018